Implementation via rights structures

Abstract

Implementation of socially desirable alternatives can be thought of as a way to design power distribution in a society such that the equilibrium outcomes coincide with the alternatives chosen at each preference profile. In this paper, we introduce a new institutional framework for implementation, which takes power distribution in a society as its point of departure. We use the notion of a rights structure, introduced by Sertel (2001), to formalize the power distribution in a society. We formulate and characterize implementability via rights structures under different specifications, which require having well-defined convergence dynamics and being consistent with farsighted behavior. We identify how implementation via rights structures is related to implementation via mechanisms. In the presence of at least three agents, we find the class of rights structures, implementability via which is equivalent to Nash and strong Nash implementability. We also introduce a strategic counterpart of implementation via rights structures in terms of deviation-constrained mechanisms.